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Treating Children the Same Isn’t Always Best in Estate Planning

Lucere Legal helps families thoughtfully plan their estates
Categories: Estate Planning

Many parents are inclined to treat all their children equally when it comes to inheritance, but Personal Family Lawyers® know that sometimes that is not the wise choice.  Here are some situations where an unequal distribution may work better:

Children with differing means – if you have one child that has significant wealth and another that struggles financially, you might want to leave more to the less financially advantaged child.  If that is the case, it is important to either explain it to them beforehand or write a letter to be opened upon your death that explains your reasoning.  Most people equate money with love, so failing to explain your decision can leave hard feelings behind.

Poor money manager – if you have a child who doesn’t manage money well and is always in debt, consider an alternative to leaving an inheritance outright. Setting up a spendthrift trust to disburse certain amounts at predetermined ages, or allocating funds for specific purposes like medical or educational expenses, can protect the inheritance throughout your child’s lifetime.  In these cases, it is best to name a trustee who is not a family member or else resentment can grow between family members.

Rocky relationships – if you have a child who may experience a divorce or who has history of bad relationship choices, you should probably consider establishing a trust to shield assets from divorce.

Special needs child – a disabled child with special needs should be provided for using a special needs trust, which can be created in a way that preserves his or her ability to receive necessary governmental assistance.

Child with ongoing medical needs – if you have a child who has a chronic illness and will need expensive ongoing medical treatment, you might consider purchasing additional life insurance naming that child as beneficiary.  If the child is a minor, you will need to set up a trust as the beneficiary of the policy.

Pre-existing loans – if you have made significant loans to one child but not others, you may want to count them as an early inheritance and take them into account before the rest of your estate is distributed.

Estranged children – in some cases, parents want to disinherit a child.  If this is something you may decide to do, you need to be clear in your plan that you are intentionally disinheriting the child and not just simply omit them from the plan.

If you’d like to learn more about creating a personalized estate plan, call our office at (612) 206-3701 or fill out our contact form today to schedule a time for us to sit down and talk.

Image courtesy of anekoho / FreeDigitalPhotos.net

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